Insurers may face $18 billion bill for Hurricane Ike

www.environmental-finance.com/
London, 18 September:

Insured losses from Hurricane Ike could reach $18 billion in the US alone, according to some estimates. The hurricane made landfall in Galveston, Texas in the early hours of 13 September, as a strong Category 2 storm, after devastating Haiti and Cuba. At least 145 fatalities were caused by the hurricane. Haiti, which has been hit by four storms in as many weeks, leaving at least 550 people dead and up to 1 million homeless, according to the BBC, accounted for the largest number of fatalities.

Catastrophe modelling companies are still in the process of calculating the likely financial losses from the hurricane, but estimates for onshore, insured losses in the US range from $6-18 billion. An early estimate by Risk Management Solutions (RMS) put losses in the Caribbean at between $50-200 million.

But RMS, the risk modelling firm which has published the most up-to-date figures, has reduced its initial estimate for insured losses in the US, from $6-16 billion to $7-12 billion. This figure includes onshore and offshore insured losses, but excludes some bill items – including work stoppages at oil and gas platforms in the Gulf of Mexico. Christine Ziehmann, director of model management at RMS, said: "Our reconnaissance teams have focused on evaluating wind and storm surge damage in the landfall region, and they have found that despite some severely affected coastal areas, Ike wasn't as damaging as initially feared."

This was largely because of the financial impact on the city of Houston was not as bad as originally feared. She added: "While the 75-storey JPMorgan Chase tower was extensively damaged, the majority of downtown Houston had minimal damage. They also found that most of the large industrial facilities, including the oil refineries, escaped significant flooding or other damage, though they are dependent on power being restored to regain operations." Peter Dailey, director of atmospheric science at AIR Worldwide, said on the day the hurricane struck land in the US that mobile homes and warehouses were particularly likely to suffer damage. Its initial estimate put insured, onshore losses at $8-12 billion.

Oakland-based Eqecat gave the highest estimate for onshore insured losses, at $8-18 billion, excluding insured losses relating to flooding and vehicles. The risk modelling firms are yet to produce estimates for damage to oil and gas infrastructure in the Gulf of Mexico. According to Platts, 28 oil and natural gas platforms were destroyed during the hurricane, accounting for around 11,000 barrels a day of oil output.